1. Field of the Invention
The present invention relates to systems and methods for processing transactions involving accounts for reimbursing medical expenses or patient responsible balances; more specifically, the present invention relates to a method and system for processing transactions involving those accounts that are handled by multiple entities having multiple transaction substantiation modes.
2. Background
In the United States, the Internal Revenue Service (“IRS”) Code allows an employer to create accounts for reimbursing its employees with qualified medical expenses or patient responsible balances (“PRBs”). These accounts are hereinafter referred to as “reimbursing accounts”. The IRS Code also determines the types of expenses which are reimbursable. For example, some reimbursable expenses are co-payments and deductibles for health care expenses, vision expenses, ambulance expenses, oxygen equipment, wheelchairs, prescription drugs, and the like.
One example of a reimbursing account is the flexible spending account (FSA). As understood in the art, a FSA is a pre-tax account used to reimburse qualified medical expenses or PRB which would otherwise be paid directly by the plan participant. A FSA can be funded by an employer, employees or both. It is sponsored by an employer and typically administered by a third-party administrator (TPA) and/or any other service agent(s) designated or contracted by the employer. Alternatively, an employer can sponsor and administer a FSA independently. Typically, the employee, i.e. account holder, designates a portion of his or her compensation into an FSA on a tax-free basis. The employee receives desired goods and services of which the employee's health insurance may pay for a portion or all of the cost. Generally, in the case of pharmacy transactions, the determination of the amount the employee's health insurance will pay is made by a pharmacy benefits manager (PBM) that is typically associated with the health insurance. Often, the employee is required to pay at least a percentage or flat fee, e.g., the PRB. If the out-of-pocket employee payment is a qualified expense under the IRS Code, the employee can be reimbursed from his/her FSA. FSAs provide benefits to employers and employees by saving both tax dollars. Further, employers increase employee morale and retention, enhance their status in recruiting and provide flexibility to their employees. Employees garner the advantages of budgeting for qualified expenses and directing how their FSA money is spent. As also understood in the art, other examples of a reimbursing account include the health reimbursable arrangement account (HRA), the medical savings account (MSA), and the like.
An employer, independently or through a TPA/service agent, can utilize one or more PBMs, in the case of pharmacy transactions, to administer reimbursing accounts to its employee population. For instance, an employer with an employee population situated in multiple localities may sponsor multiple local health plans in order to provide adequate health care coverage to all of its employees, wherein each health plan typically has its own PBM and PBM arrangement. Hence, the employer can have a particular PBM arrangement with each PBM through the associated health plan. Alternatively, the employer or its TPA/service agent can directly contract with multiple PBMs to administer the reimbursing accounts to the employee population.
As referred herein, the term “employee” or “employee population” includes the employee(s), the employee's spouse or partner, and/or the employee's dependent(s) that participate in the employer's program(s) involving accounts for reimbursing medical expenses or patient responsible balances.